Fracture injuries represent a significant clinical burden, with up to 6.2 million fractures occurring annually in the United States alone, of which 10% are complicated by non-unions. Current methods for treatment of non- unions with bone grafts have been fraught with multiple shortcomings, leading to an urgent and unmet need for alternative approaches. Adult bone marrow (BM) contains multipotent mesenchymal stromal cells (MSC) that have all the properties to become a novel therapeutic approach to treat non-unions. MSC have ample regenerative abilities via their multilineage, end-stage mesenchymal cell type differentiation potential (autocrine effect) and through secretion of bioactive molecules that regulate the regenerative microenvironment of an injured tissue (autocrine effect). During the first cycle of this grant, our laboratory has reported in several published investigations the in vivo dynamics of MSC after transplant, their engraftment within a specific fracture callus endosteal niche where they express bone morphogenic protein-2 (BMP-2) and their beneficial effects on fracture tissue healing and strength. We have also found that transplanted MSC expressing insulin- like growth factor-I (IGF-I) differentiate into bone cells within the fracture callus and promote fracture healing by inducing more new bone formation than MSC alone. The central hypothesis of this proposal is that MSC improve the fracture repair process by promoting a regenerative microenvironment through autocrine and paracrine actions. Specifically, we propose the following: Specific Aims1, to determine whether MSC improve the fracture repair process through induction of BMP-2 expression; Specific Aim 2, to determine whether MSC programmed to express IGF-I improve fracture healing by promoting bone formation through autocrine and paracrine mechanisms. Our results will open novel perspectives that will allow the full appreciation of the regenerative capacities of MSC and therefore set new research directions in the field of regenerative medicine. A comprehensive approach that combines in vivo and in vitro studies on genetically engineered mice, mouse models for non-unions and novel methods to assess fracture healing will be applied to accomplish the proposed aims. Studies would have major biomedical relevance and implications, as they lead to a better understanding of the mechanisms through which MSC promote fracture repair that will set the foundation for the development of novel MSC-based therapies to promote fracture healing in patients with non-unions.